Mini-CASE: Gaggle Devices Gaggle Inc. is considering manufacturing and selling two possible mobile computer/phone devices. The first device, the 5GBot, is a 6.5 inch OLED diagonal screen, 1 inch thick slate using Gaggle's mobile phone Robot operating system. The second device, the GiBLet, is a fold out booklet-type phablet which is 7.5 inch diagonal screen when opened and would use Gaggle's yet to be released Glowium operating system. Each device has a 4-year expected life which includes annual updates. The table below lists the expected cash flows (in millions of dollars) for each proposed device and the WACC for each project is 12 percent. Year 5GBot GiBLet 0 -800 -1000 1 300 350 2 330 400 3 450 4 310 410 1. What is the payback and discounted payback period for each proposed device? 2. What is the NPV, IRR, and MIRR for each proposed device? 3. Construct NPV profiles for each device and graph them on the same chart. What is the crossover rate between the two projects? 4. Why do the NPV profiles for the 5GBot and GiBLet cross? 5. Gaggle feels that they should just concentrate on making and providing service & technical support for one device. Which device, if any, should Gaggle select in this case? Explain your decision. 360 Mini-CASE: Gaggle Devices Gaggle Inc. is considering manufacturing and selling two possible mobile computer/phone devices. The first device, the 5GBot, is a 6.5 inch OLED diagonal screen, 1 inch thick slate using Gaggle's mobile phone Robot operating system. The second device, the GiBLet, is a fold out booklet-type phablet which is 7.5 inch diagonal screen when opened and would use Gaggle's yet to be released Glowium operating system. Each device has a 4-year expected life which includes annual updates. The table below lists the expected cash flows (in millions of dollars) for each proposed device and the WACC for each project is 12 percent. Year 5GBot GiBLet 0 -800 -1000 1 300 350 2 330 400 3 450 4 310 410 1. What is the payback and discounted payback period for each proposed device? 2. What is the NPV, IRR, and MIRR for each proposed device? 3. Construct NPV profiles for each device and graph them on the same chart. What is the crossover rate between the two projects? 4. Why do the NPV profiles for the 5GBot and GiBLet cross? 5. Gaggle feels that they should just concentrate on making and providing service & technical support for one device. Which device, if any, should Gaggle select in this case? Explain your decision. 360